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Author Topic: Is it possible - A block chain for stocks?  (Read 1702 times)
001sonkit
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October 06, 2012, 05:18:59 AM
 #1

My idea is that. A new blockchain for stocks, which the chain contains multiple "currency", and the basic one is STC (stock coin). people have to mine for stock coin which is created at a static rate after the first year with 200%. Stock coin could be used for listing new stock and paid as fee for transfer/buy/sell, so ppl will mine them.
Divident could be paid out by different currencies in the chain (such as if sb created a stock named TERA), divident could be in TERA or STC.

Also, stocks could be traded like Bitcoin, in fraction.

Just crazy think since Neferio GLBSE is no longer here, lefting crypto and one more, and thinking of this decentralized thingy.

Tell me if I have any conceptual mistake(s)

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Bitcoin Oz
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October 06, 2012, 05:21:25 AM
 #2

A fork of namecoin would be better so each individual stock could have its own subdomain.

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October 06, 2012, 05:45:53 AM
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You might want to search around here for "colored coins" as they are a method by which the bitcoin blockchain itself can actually be used as a mechanism for issuing and later transferring individual "shares" (being bitcoin amounts) from an originating tx.

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Mike Hearn
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October 06, 2012, 01:39:56 PM
 #4

You don't need a separate block chain. Look at the smart property wiki page:

https://en.bitcoin.it/wiki/Smart_Property

A stock can be modelled as smart property and the key in the control output (or "coloured coin" if you want) then can be used to cast votes and receive dividends.

You may also want to read this page and/or watch the talk I gave at the Bitcoin 2012 conference on these topics:

https://en.bitcoin.it/wiki/Contracts

there is a YouTube video linked from that. I briefly mention stock markets at one point.
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October 06, 2012, 02:42:32 PM
 #5

http://www.youtube.com/watch?v=mD4L7xDNCmA

any source for the Q&A of the talk?

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October 06, 2012, 06:47:58 PM
 #6

Here is my idea for a distributed chain for ownership:

From a PM I sent a month ago...

(I thought about sending something like this last night, but right now I don't remember if I did or not.  Insomnia for the win!  Sorry if this is a duplicate, been up late a couple of nights in a row thinking on this.)

So, I happened to be working on setting up litecoin mining on my rigs and registering for MPEX at the same time, and it gave me an idea.  Mind if I bounce it off you before I inflict it on the world?

Basically, for all of MPEX's fancy cryptography, I'm still not buying shares, I'm buying entries in a ledger.  This seems wrong, the world deserves better.

I'm thinking of an altchain for recording securities (stocks and bonds).  For now, I'm thinking it should be called securitycoin, or S-coin, or STC.

Say we add a payload field to the TxOut structure.  (It'll likely be a blob of DER)

If you want to create a new stock, you encode a bunch of information (the name of the issue, the number of shares, some other stuff and a hash of the prospectus) and call it the issue.  Then you hash the issue along with a secret and call that a registration.  Then you create a payload including the registration and burn a few S-coins in fees to embed it in the chain.  Then, when you feel it is deep enough, you redeem the transaction with the registration to create a new transaction with the issue as a payload (also the secret, to prove that it was you.  This is anti-front running stuff).

Now you can redeem the issue with a send to a bunch of brokers.  The brokers can redeem those as usual, and send the shares to clients.  Clients can redeem their transactions and send them to other people, if they so desire.  *

Once the issue is done, every share has a provable owner, and the owner owns the shares, not the issuer, not the broker, and not some exchange.  Even better, if we use regular bitcoin addresses on this network, the issuer can query the chain and get a list of addresses and holdings to send dividends to (on the bitcoin chain).

The system could even handle splits, merges and votes.  The only trick there is to encode the payload in a way that the network can validate the payload cheaply.  For example, in addition to enforcing coin_out < coin_in, it also needs to verify that shares_out = shares_in (paying network fees with shares seems silly, but replace the = with < and it can happen).

Since this system isn't for buying packs of gum at the store, we could slow the network down, maybe to 1 block per hour, to keep the size small.  And we could keep the value of the coins high-ish, giving an incentive for people to merge-mine it, by charging high fees for things like registrations, issues and vote requests, and small fees (or none) for sends and votes.

* I don't think it is possible to take the brokers out of the system.  I don't see any obvious way to make a pair of transactions on different chains that redeem each other.  If there is such a thing, you and your broker could create such a contract and make the trade atomic.  Until then, one of you needs to trust the other.  Then again, if we are using the same keys in both places, maybe multi-sig can do it, don't know.  At worst, it is no worse than any other bitcoin/world interaction, and you still get the benefits of recording stock ownership in the chain.

Also, see this thread and search for pybond.

When I got to thinking about Open Transactions the other night, I was thinking it might be possible to do everything in a distributed provable exchange using that system.  Talking to Fellow Traveller about it is on my todo list.

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October 07, 2012, 06:36:33 AM
 #7

All of this can be done in Open-Transactions; it does it out of the box.

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October 09, 2012, 07:21:29 AM
 #8

Same idea here:
https://bitcointalk.org/index.php?topic=116991.0
I guess this pops up every now and then?

Now.. who is going to make a branch from bitcoin-qt, named for example bitstock-qt? displaying a briefcase of assets (colored coins) instead of bitcoins.. Or what is the status of colored coins?

And it should also be considered if it is right thing to do inside bitcoin block chain. Good: more hashing power to
assure stock transactions. Bad: 1) why coin miners/holders should 'pay' for stock holders (with hashing power and data storage). 2) extra data to the coin blockchain. Maybe there really should be an own bitstock blockchain?

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October 09, 2012, 07:40:00 AM
 #9

I have written this before many months ago but I'll try again now.

The only entities that need to know I own a particular share are those entities that are capable of shipping me my share of the buildings or livestock or inventory or whatever that it is a share of, or of shipping me dividends.

To anyone else it is business intelligence they probably should not have and that maybe I would prefer they not have.

So when ownership of a share of Company X changes hands the only folk who need to know are the two parties whose hands it changes between, Company X itself, and the collection agencies / thugs / asset-seizers local to Company X who will be liquidating Company X in the case it becomes insolvent such as by failing to pay any promises to pay it makes such as promising to pay divdends/interest on a specific schedule.

No one else needs to know nor maybe should be caused to know.

Certainly not every bitcoin blockchain copy all over the known universe.

So there is not a global consensus to hammer out, there is merely the problem of having both parties to the change of hands, plus Company X itself, plus gang of repossession thugs aka liquidators who are contracted to reduce Company X to its component assets and distribute them to shareholders in the event of insolvency all agree on the order in which the change of hands took place as compared to any other changes of hands of shares of Company X. Maybe contract some extra gangs of thugs aka liquidators to break the legs of or confiscate the assets of the first such gang in the event the first such gang does not perform as contracted, and maybe a backup gang in case those fail too. Depends how much you want to pay for gangs of thugs to "insure" you get your share of what Company X has...

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October 09, 2012, 08:30:26 AM
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No one else needs to know nor maybe should be caused to know.

Certainly not every bitcoin blockchain copy all over the known universe.



well, the bitcoin blockchain only knows that "the person owning secret key to this public key owns xxx shares of that property" and "divident of these shares are sent to the owner of this public key". It has no idea who actually owns the secret keys.

If you own the secret key for the share, you can sign a transaction which either 1) sends the share to some other secret key holder or 2) change the divident address. And something else? vote?

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October 09, 2012, 11:43:55 PM
 #11

I have written this before many months ago but I'll try again now.

The only entities that need to know I own a particular share are those entities that are capable of shipping me my share of the buildings or livestock or inventory or whatever that it is a share of, or of shipping me dividends.

To anyone else it is business intelligence they probably should not have and that maybe I would prefer they not have.
That's why this is a great complement to this idea:
All of this can be done in Open-Transactions; it does it out of the box.
Now sure, all of this can be done in Open-Transactions. However, using the bitcoin blockchain IN ADDITION to Open-Transactions allows you to directly trade stock for bitcoins and vis-versa over-the-counter without interference and dependence on a third-party server. You could even transfer stock directly to another OT server without the destination needing to trust the sender.

Basically, think about the current state of bitcoin exchanges, except pretend that they are OT servers. You can send USD to one server, buy bitcoins, and send them to any other server, including your own. If you want, you can later send those bitcoins to a completely different OT server and exchange them back to USD, which can be sent to you in a completely different way than you sent the USD initially. Sure, I'm oversimplifying OT servers and not stating how limited their abilities are in stealing something, but that is besides the point. It's still nice to know that you can provably show that you own something even if all of the backups for the server are lost, when you use the blockchain.

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October 10, 2012, 04:36:49 AM
 #12

All of this can be done in Open-Transactions; it does it out of the box.
Now sure, all of this can be done in Open-Transactions. However, using the bitcoin blockchain IN ADDITION to Open-Transactions allows you to directly trade stock for bitcoins and vis-versa over-the-counter without interference and dependence on a third-party server. You could even transfer stock directly to another OT server without the destination needing to trust the sender.

Basically, think about the current state of bitcoin exchanges, except pretend that they are OT servers. You can send USD to one server, buy bitcoins, and send them to any other server, including your own. If you want, you can later send those bitcoins to a completely different OT server and exchange them back to USD, which can be sent to you in a completely different way than you sent the USD initially. Sure, I'm oversimplifying OT servers and not stating how limited their abilities are in stealing something, but that is besides the point. It's still nice to know that you can provably show that you own something even if all of the backups for the server are lost, when you use the blockchain.
No, that's precisely the point. An OT receipt and/or the auditing protocol (in the works) is all that is required to prove ownership or to rebuild the server should it stop working or be taken down. The OT README has a pithy way of making this point: “The vision is not of a central server that you must trust. Rather, the vision is of federated servers you don't have to trust.”

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